Big-Name U.S. Investors Back Brazilian Ethanol

Big-Name U.S. Investors Back Brazilian Ethanol Start-Up

Antonio Regalado. Wall Street Journal. (Eastern edition). New York, N.Y.: Mar 15, 2007. pg. C.5

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Author(s):	Antonio Regalado
Publication title:	Wall Street Journal. (Eastern edition). New York, N.Y.: Mar 15, 2007. pg. C.5
Source type:	Newspaper
ISSN:	00999660
ProQuest document ID:	1233150981
Text Word Count	393
Document URL:	http://proquest.umi.com/pqdweb?did=1233150981&sid=1&Fmt=3&clientId=22168&RQT=309&VName=PQD

Abstract (Document Summary)

Politically, ethanol is turning Brazil and the U.S. into closer allies, and President Bush signed an ethanol pact during a visit here last week. Though short on specific measures, the agreement was a sign to investors that global trade of ethanol could grow quickly. Mr. Bush has called for the U.S. to replace 20% of the gasoline it uses with renewable fuels within 10 years. The new company will join other private-equity groups looking to expand Brazil's ethanol output. Brazil produced 4.5 billion gallons of ethanol last year, and exported about 20% of that, mostly to the U.S. However, exports are widely expected to boom as global-warming and energy-security concerns speed a shift to alternative fuels.

Full Text (393 words)

(c) 2007 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission. SAO PAULO, Brazil -- Some big-name U.S. investors are behind a new company that plans to produce as much as a billion gallons of ethanol a year in Brazil, about a fifth of the country's current total production of the renewable fuel. Backers of the new company, Brazilian Renewable Energy Co., include venture capitalist Vinod Khosla, American supermarket magnate Ron Burkle and AOL founder Steve Case, according to an investor in the company. The deal is expected to be formally announced today, people involved in the deal said yesterday. Brazil's ethanol industry, which uses sugar cane to make the fuel more cheaply than in the U.S., where ethanol is made from corn, is drawing growing interest from private-equity investors. Amid concerns about growing energy demand, renewable energy of all kinds -- including solar and wind energy -- has seen investment levels soar recently. Politically, ethanol is turning Brazil and the U.S. into closer allies, and President Bush signed an ethanol pact during a visit here last week. Though short on specific measures, the agreement was a sign to investors that global trade of ethanol could grow quickly. Mr. Bush has called for the U.S. to replace 20% of the gasoline it uses with renewable fuels within 10 years. The new company -- known as Brenco -- closed an initial financing round of $200 million this week, said Ana Fernandes Kertesz, a vice president of Goldman Sachs in Brazil, which is acting as Brenco's placement agent. "It's the first equity raised, but there is more to come," she said. Brenco, based in Bermuda, will be run by Philippe Reichstul, formerly chief executive of Petrobras, Brazil's state oil concern. Petrobras said on Tuesday that it would begin work on an ethanol pipeline this year. The new company will join other private-equity groups looking to expand Brazil's ethanol output. Brazil produced 4.5 billion gallons of ethanol last year, and exported about 20% of that, mostly to the U.S. However, exports are widely expected to boom as global-warming and energy-security concerns speed a shift to alternative fuels. Samir Kaul, a partner at Khosla Ventures, couldn't be reached yesterday, but he previously confirmed Mr. Khosla's involvement in the venture. Gerry McConnell, an executive with Mr. Burkle's Yucaipa Cos, didn't return a phone message. A spokesman for Mr. Case declined to comment.